## Facts

- BFW Liquidation, LLC (formerly Bruno’s Supermarkets, LLC) operated grocery stores and bought ice cream from Blue Bell Creameries, Inc. on trade credit, typically with frequent deliveries and twice-weekly payments.
- In the 90 days before the Chapter 11 filing, Bruno’s paid Blue Bell about $563,869 while Blue Bell delivered about $435,706 in ice cream.
- The liquidating trustee sued to avoid and recover the prepetition payments as preferential transfers under 11 U.S.C. § 547(b).
- Blue Bell conceded the transfers satisfied § 547(b) but asserted the subsequent-new-value defense under § 547(c)(4), seeking to offset preference exposure by the value of goods delivered after the challenged payments.
- The dispute turned on whether § 547(c)(4) credits only new value that remained unpaid on the petition date or also credits new value later repaid, so long as the repayment was not “otherwise unavoidable.”

## Issues

1. Whether the subsequent-new-value defense in 11 U.S.C. § 547(c)(4) requires that the creditor’s new value remain unpaid as of the bankruptcy petition date.
2. How to interpret § 547(c)(4)(B)’s limitation that the debtor must not have made an “otherwise unavoidable transfer” on account of the new value.

## Decision

- The Eleventh Circuit reversed and vacated the bankruptcy court’s judgment and remanded for recalculation of preference liability.
- The court held § 547(c)(4) does not impose a requirement that new value remain unpaid.
- The court concluded earlier Eleventh Circuit language suggesting an “unpaid” requirement was dictum and not binding.
- The court interpreted “otherwise unavoidable transfer” to mean unavoidable for reasons independent of the § 547(c)(4) defense, not every repayment of the new value.
- On remand, Blue Bell could receive credit for subsequent unsecured new value even if later paid, except to the extent payment was “otherwise unavoidable.”

## Legal Principles

- Under 11 U.S.C. § 547(c)(4), a creditor may offset preference exposure to the extent it gave qualifying subsequent new value after the challenged transfer.
- Section 547(c)(4) contains no petition-date “remain unpaid” requirement; courts should not add such a condition absent statutory text.
- Prior judicial statements not necessary to a prior case’s outcome are dictum and do not bind later panels.
- For § 547(c)(4)(B), a debtor’s payment on account of new value defeats the defense only if that payment is “otherwise unavoidable” on some ground apart from § 547(c)(4).
- The defense is available for new value not secured by an otherwise unavoidable security interest and not repaid by an otherwise unavoidable transfer.

## Conclusion

The Eleventh Circuit held that § 547(c)(4) permits a subsequent-new-value offset even when the debtor later paid for the new value, unless the repayment is independently unavoidable, and it remanded for recalculation of the creditor’s preference liability under that rule.


Kaye v. Blue Bell Creameries, Inc. (In re BFW Liquidation, LLC), 899 F.3d 1178 (11th Cir. 2018)